PayPal, eBay to Stay Interdependent for Five Years After Split

PayPal, eBay to Stay Interdependent for Five Years After Split
Image credit: Sukharevskyy Dmytro (nevodka) / Shutterstock.com
1 min read
This story originally appeared on Reuters

PayPal, eBay Inc's electronic payments division, said the two firms had agreed that eBay would not reduce the volume of transactions it channels through PayPal, while continuing to get better rates for its merchants for five years after the two split.

PayPal is slated to be separated from eBay's marketplace division in the second half of this year, creating a publicly traded company, which some analysts say will be worth $40 billion.

EBay has agreed to ensure it will channel 80 percent of its online gross merchandise sales via PayPal, as it does now, for the next five years, PayPal said in a regulatory filing on Thursday.

The two companies also agreed to pay each other a commission if the percentage of marketplace sales rose or fell above that mark.

PayPal, for its part, said it agreed to continue charging eBay merchants less than it does other merchants, which would mean that "PayPal rates for eBay merchants will remain largely consistent with today's pricing relationship".

The terms of the agreement also prohibit eBay from forming its own payment service and PayPal from starting its own marketplace.

(Reporting By Lehar Maan in Bengaluru; Editing by Savio D'Souza)

More from Entrepreneur

Get heaping discounts to books you love delivered straight to your inbox. We’ll feature a different book each week and share exclusive deals you won’t find anywhere else.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.

Latest on Entrepreneur